Benjamin Graham, Warren Buffett, Peter Lynch–for more than a decade, I have studied the strategies these stock market legends and other incredibly successful investors have used to build their reputations and fortunes.

In my new book, The Guru Investor: How to Beat the Market Using History’s Best Investment Strategies, I show how each of these “gurus” did it–and how, step-by-step, you can use their approaches today to log some impressive returns of your own.

The following is an excerpt from Chapter 2 of the book, which explains how these gurus, although they used a variety of different methods, shared key commonalities that played big roles in their incredible successes.

Just who are these investors, and how did they do it? Well, it’s easy to imagine them as some sort of Wall Street superheroes, people who, either through a gift of birth or years upon years of experience have the ability to enter the market at just the right time and then cash out just before things go south. After all, if most people fail to make money in stocks because they try unsuccessfully to time the market, wouldn’t it follow that those who have succeeded were simply on the other end of the market-timing success/failure spectrum?

That would make for a great story, the notion of these prescient, unbeatable investors. The problem is that it’s just not true. Sure, some people have been fortunate enough to make a lot of money with good (perhaps “lucky” is a better word) timing in the short term. But as I began researching how the best investors of all-time made their fortunes, I quickly found that the Peter Lynches and Warren Buffetts of the world succeeded over the long term not by playing the game better than the average investor, but by playing it differently.

A Numbers Game

Playing the game differently. What exactly does that mean? Well, essentially it is what Ben Graham, the man known as “The Father of Value Investing,” alluded to in his 1949 classic The Intelligent Investor. when he said that a stock investor cannot hope to succeed “unless he is armed with mental weapons that distinguish him in kind–not in a fancied superior degree–from the trading public.

In Graham’s time (his investment career began around 1914), just as today, millions of investors around the world bought and sold stocks based on whether those stocks (or the market in general) were going up or down on a particular day. They were market-timers. Graham believed, however, that trying to be better than other investors at timing the market or speculating about the future of a stock was no way to succeed over the long term. Banking on the idea that you were the rare exception to the rule of market timing failure was simply too risky a gamble for the average investor. Instead, Graham believed that you needed to find a way to assess a stock’s long-term value other than by looking at recent shifts in its market price.

Looking for other ways to value stocks was, in fact, just what all of the gurus I follow did–and the way they did it was by focusing on the numbers. By “the numbers,” I’m not just talking about a stock’s per-share price (though price was certainly one of the things that they examined when deciding whether to buy or sell); I mean a stock’s fundamentals–the measures of how its underlying business is performing. A stock’s price can shift from day to day or month to month because of a variety of factors that have nothing to do with the company’s quality. But its fundamentals–earnings, sales, debt, cash flows, and the like, usually give you a true indication of how strong its business really is.

What the gurus understood was that companies that had strong fundamentals tended to continue to run successful businesses, and that their long-term business success correlated with long-term gains in their stock prices. They also knew that in the short term, a business’ fundamentals don’t always match up with its market price–in particular, they knew that the investing world can sometimes undervalue a good company. These are the companies on whose stocks the gurus tended to pounce, believing that over time, other investors would realize the value in these stocks and drive their prices upward.

Crucial Similarities

As interesting as it is to note the differences in the gurus’ specific strategies, it is absolutely critical to understand the similarities in their mindsets–and how their mindsets fundamentally differed from those of other investors.

Humans are emotional beings, which helps us in many aspects of life but hurts us when investing. When the market or individual stocks go down, we have the urge to sell, and when they rise, we have the urge to buy, even though there is often no real long-term significance to these short-term movements. And when we try to predict these short-term price changes we often fail, and end up buying high and selling low.

The gurus, however, all understood that short-term market fluctuations were simply part of life when you invested in stocks, and they didn’t let their emotions convince them otherwise. They took a long-term outlook, never wavering from their approaches–even when the market was down or their individual stocks were down in the short term. If they believed a stock was still a good buy for the long haul, they stuck with it. Buffett, for example, so believed in his own method of valuing stocks that he once said, “As far as I am concerned, the stock market doesn’t exist. It is there only as a reference to see if anybody is offering to do anything foolish.”

Buffett, like the rest of the gurus, knew that no strategy could beat the market every quarter, or even every year. Indeed, all of the gurus whom we’ve studied have gone through down periods compared to the market, which, when you think about it, is inevitable. If there were a strategy that outperformed the market every quarter or every year, everyone would flock to it. That would then drive the prices of stocks favored by that strategy through the roof, which at some point would limit your gains and lead to the strategy’s failure.

In reality, what happens is that every strategy goes through a down period that can last a year or more. And when they do, many investors see the value of their portfolios declining and abandon the approach, letting their emotions get the best of them. Other investors won’t even consider starting to follow a strategy following a down period. They’ll scrap a proven strategy that’s having a down quarter or down year in favor of the latest “hot” strategy from the last year, which usually lacks a long-term track record and is more hype than substance. When that strategy fails, they’ll jump again, chasing “hot” strategies–and returns–all the way. Meanwhile, the disciplined investor who withstands the short-term discomfort and sticks to a proven long-term strategy ends up reaping the long-term gains.

And therein lies the gurus’ true greatness. It’s not that they’ve developed complicated theories that are unintelligible to laypeople, or that they have some sort of otherworldly ability to predict where the market will head. It’s that they possess the discipline to withstand the assault that the market makes on our emotions from day to day, and focus on what they knew was best for the long term. As Peter Lynch once said in a PBS interview, “Stomach is the key organ here. It’s not the brain.”

John P. Reese is founder and CEO of Validea.com and Validea Capital Management, and co-author of the new investing book The Guru Investor: How to Beat the Market Using History’s Best Investment Strategies (John Wiley & Sons). He is also co-author of The Market Gurus: Stock Investing Strategies You Can Use From Wall Street’s Best. Click here for more of Reese’s insights and analysis, and to subscribe to the Validea Hot List.